Centralization of strategic decisions during the Great Recession

Zoltán Bakonyi and Balazs Murakozy

Managerial and Decision Economics, 2019, vol. 40, issue 4, 394-413

Abstract: We use a survey dataset of more than 14,000 manufacturing firms from seven European countries in order to examine changes in the degree of centralization that followed the Great Recession in 2009. We document three findings. First, we find that a larger fall in sales is associated with a tendency to centralize. The finding is consistent with a theoretical prediction that organizations facing substantial demand shocks are more likely to centralize. Second, we show that the change in the level of centralization during the crisis was accompanied by other decisions characteristic of short‐term optimization. Third, we show that increased centralization has led to slower postcrisis growth even when controlling for the size of the shock and other decisions taken during the crisis.

Date: 2019
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https://doi.org/10.1002/mde.3010

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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:40:y:2019:i:4:p:394-413

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